Market Commentary – August 4, 2021

Kevin Jock

4th August 2021

On Wall Street, broad-based benchmarks rose on the back of strong corporate earnings and better than expected monthly U.S factor orders offsetting growing risk from the Delta variant and remarks by U.S. Federal Reserve Governor Christopher Waller on Monday. Whom noted that if employment data in proceeding two months showed continued improvements, then he and fellow regional Fed presidents would support an announcement on tapering back quantitative easing.

Europe painted a similar picture as healthy earnings paved the way for the CAC40 to fresh records. Unanimously, remaining indices across the region gained with the likes of STOXX50 up 0.2% and the FTSE100 higher by 0.4%.

Mixed start to Asia as the Hang Seng shrugged Monday’s fears over another regulatory clampdown from Beijing after state-owned new agency, Xinhua News, publicly denounce gaming as “spiritual opium” and “electronic drugs”. The article sent Tencent tumbling and along with it, Hong Kong’s index. Nevertheless, today saw markets recover 2.5%. Meanwhile, the S&P200 also gained modestly whilst the Nikkei fell.

Crude oil continues to remain under pressure, tumbling over $1 to $70.40 as the Delta variant threat spreads to nearly half of China’s 32 provinces in 2 weeks. Alongside work than anticipated flooding and typhoon season, potentially derailing the nation’s economic. Thus far, authorities have advised residents in Beijing to remain in the capital, regional cities and townships have been under lockdown. Tourist sites, cultural events and flights have been cancelled.

Mute action across US dollar crosses stayed put ahead of non-farm employment on Friday. In focus today, NZDUSD rallied 50 pips during Asia session following improving jobs data. Unemployment fell from 4.6% to 4.0% and quarterly employment grew 1%. Gold finds support on $1,810 level and bitcoin drifts below $38,000.

CACCAC

Figure 1 (Source: IS Prime) FR40 Monthly : French CAC 40 settles at all-time highs after Paris-based bank Societe Generale reported profits that beat expectations

Headliner to Review

  • US monthly factory orders beat expected 1% to grow 1.5%. Unfilled orders were up 5 consecutive months giving weight that supply is current constrained.
  • Labour market statistics out of New Zealand saw unemployment rate drop to 4% beating expectations of 4.4%. Interestingly the report detailed that that “this quarter, COVID-19 restrictions had no discernible effect on the rate of unemployment”

Headliner to Watch

  • ADP non-farm employment change in the U.S. expected to gain another 695K jobs as recovery in the country accelerates back to normality with 1st dose vaccinations just below 60%.
  • Likewise, ISM services PMI to reinforce similar rhetoric as the index is set to increase from 60.1 to 60.5.
  • Global demand in oil remains strong with 9 of the past 10 weekly figures illustrate stockpiles in deficits. This week’s inventories set to show -3.2M

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Authors:
Antony Tan
Kevin Jock